The 'Provision for Bad Debts' is created by: MCQ with Answer and Explanation

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The 'Provision for Bad Debts' is created by:

A. Crediting Cash Account

B. Debiting Profit & Loss Account and crediting Provision for Bad Debts

C. Debiting Debtors Account

D. Debiting Sales Account

Answer: Option B

Solution (By JKSSB Mock Tests)

The adjusting entry: P&L A/c Dr. To Provision for Bad Debts.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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Question #1

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When starting a BRS with a debit balance as per the Cash Book, cheques issued but not yet presented for payment should be:

A. Ignored

B. Divided

C. Deducted

D. Added

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Correct Answer: Option D

Explanation:
These cheques decreased the cash book balance but not the pass book. To match the pass book, they must be added back.

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Question #2

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Goodwill brought in by a new partner in cash is distributed among old partners in:

A. Equal ratio

B. New profit-sharing ratio

C. Old profit-sharing ratio

D. Sacrificing ratio

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Correct Answer: Option D

Explanation:
The premium for goodwill brought by incoming partner is distributed to old partners in their sacrificing ratio.

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Question #3

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The 'Intangible Asset' (AS 26) is recognised if:

A. It is purchased

B. It is internally generated

C. It is probable that future economic benefits will flow and cost can be measured reliably

D. It has physical substance

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Correct Answer: Option C

Explanation:
Intangible assets are recognised when they meet the definition and recognition criteria.

This question belongs to: Accountancy and Statistics Accountancy and Book Keeping

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